It’s been a while

Mar 15th, 2012 | Random

It’s been a while since I last posted on this blog. That is certainly not the way to treat your readers and I apologize for that. There are several reasons for this long break, and I will not bore you with them. The good news is that this hiatus has provided me the opportunity to reflect on the direction of this blog and I am excited to say that my commitment to helping you achieve your dream of starting your own business has not been stronger. Stay tuned.

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My 80/20 Rule

Nov 9th, 2011 | Running a Business, Starting a Business

As an entrepreneur, your mind races all the time. Your eyes and ears are always on alert, looking for new business opportunities. This can be both a blessing and a curse. The reason is that if you are not careful, you will pull yourself in so many directions that you will be the master of nothing. That’s why I have a general rule about how I spend my time on my business endeavors: I dedicate 80% of my time to my “core” business, and the other 20% to incubating business ideas.

It is easy to convince yourself that every new business opportunity has the potential to be big and profitable. But until you actually start the business and interact with customers, all you are doing is guessing. One of the biggest lessons I have learned as an entrepreneur is that no matter how much preparation you put in, no business plan survives contact with customers. It is usually a grind until you stumble/discover the business model that works. You only pray that you don’t run out of money before that happens.

It is therefore important to master the hill you are currently on before tackling another hill. To keep myself in check, my threshold for graduating a project into a “core” business is very high, and the biggest deciding factor (after doing my due diligence) is passion. I have found that the most effective test of passion is time. That is why I rarely make hasty decisions when it comes to starting a business. This is counter intuiitive since the tech space especially thrives on getting an idea quickly to market – fearing that someone will beat you to it. But while it is possible for someone to beat you to market, they cannot execute like you. You therefore have to be secure in your ability to execute on your plan and believe that as an advantage over the competition. As the quote below shows, you can catch up very quickly today, especially with the internet having leveled the playing field somewhat. And if it turns out that someone beat you to that idea, and you don’t think you can compete, then move on to the next idea.

This post was prompted by a conversation I had with a friend recently. We’ve been trying to incubate an idea but the project has stalled in the last two months, due in part to schedule conflicts and poor time management on my part. We therefore agreed to put the project on ice and revisit it after the holidays. In the past, taking this amount of time off would have made me nervous. But I am actually OK with it, knowing that time is also a test of passion. If we come back after 2 months and both feel equally passionate as we do now or even more passionate about moving forward, then it’s worth the risk.

What do you think about my 80/20 rule? How do you avoid getting overwhelmed with multiple business projects? I would love to hear from you. Share your ideas below in the comments section.

 

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Learn How to Motivate Your Team

Oct 6th, 2011 | Running a Business

What drives your team? When each member of your team shows up for work each day, do they clearly understand what the mission is? If you were to interview your entire team today, and ask each person to state in one sentence what the central goal of your company is, what would they say? More importantly, are they likely to all say the same thing? If you answered no, it’s time to work on developing a mission statement for your team. I know what you are thinking – “I already have a mission statement”. If you do, can each of your team members relate what they do back to that mission statement? If not, then you don’t have a mission statement. What you have is a nice sentence that probably feels good to read but has nothing to do with what your team does on a day-to-day basis. Your job is to translate that mission statement into a rallying cry. Your team cannot effectively service your customers or clients if they do not live and breathe your mantra.

Early this year, as my team at GiftCardRescue.com started to grow, it became evident that even though each member was very good at what they did, we were all working in silos, and sometimes against each other, instead of towards a common mission. I realized I needed to change that. I called a meeting and asked each of my employees to state what they think our mission is. All six of them stated something different. I then asked them to state what they think our mission should be. Who do we want to be as a company? How do we want our customers to view us? What value do we seek to provide and how do we differentiate ourselves from the competition? I collected all their responses and together with my own vision for the company, came up with a mission statement for my team – Which is “Gift Cards in, Gift Cards Out, Fast”.

At GiftCardRescue.com, Our goal is to help our customers save money through discounted gift cards. We do this by buying gift cards from those who don’t want them, at a percentage of their value, and resell them to our customers at less than face value. As a bootstrapped company, cash flow is very important to us. We not only need to get the cards in but we need to get them into the hands of our customers quickly, so that we can free up more cash to be able to repeat the cycle many times in a given month. Our mission statement therefore allows us to provide this service to our customers in the most efficient way possible. Continue reading →

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5 Ways to Start a Business – Part 4

Sep 29th, 2011 | Starting a Business

Buy a Business

You don’t always have to start from scratch when it comes to owning a business. For some people, buying an existing business makes sense. And if you don’t already know, there is an active market out there for buyers and sellers of businesses, including Bizquest, BizBuySell and MergerPlace. But before you write a check, here are the advantages and disadvantages of buying a business:

Advantages of Buying a Business

Immediate Cash Flow

When you start your own business, it takes time to turn a profit. During this time, you will burn money trying to stay afloat. Let’s say it takes you 5 years to become profitable and you end up burning $150,000 to keep the business going. Would you have gotten a better outcome by putting that money towards buying an existing business that is already profitable? Buying a profitable business guarantees immediate cash flow through inventory and receivables, which can be easily converted to cash.

Existing Customer Base

Acquiring new customers for your new startup can be expensive challenging and takes time. That is why buying an existing business is attractive because you get the existing customer base, which could be a great starting point for you to build on. In some cases, you may find that you can grow the business simply by working to convert more of the existing customers into repeat/loyal buyers than spending to acquire new customers.

Easier to Raise money

It is easier to raise money or get a loan from a bank with an existing business with a proven track record. You are able to show years of revenue and cash flow, which banks look at to decide whether you have the ability to repay the loan. Also, if you are looking to raise institutional money from Venture Capitalist, it’s easier to tell a story about where you are going with a business if you can show traction (which an existing business provides).

Existing Employee Base

Another advantage of buying an existing business is that you get the benefit of working with the current employees of the business, who can bring valuable experience and knowledge to the table.  Assuming that the current employees and management are on board with your plan for the business, they can be instrumental in moving your vision forward.

Despite the upside, there are several disadvantages to buying an existing business.  Here they are: Continue reading →

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Why I Launched Break Free Nation

Sep 14th, 2011 | Faith & Business, Startup Wisdom

Regular readers of this blog must be wondering why I re-branded the site from LeanAndProfitable.com to BreakFreeNation.com. The reason is both strategic and personal. From a strategic level, Lean and Profitable did not reflect my core mission. I have spent the last two years helping people trapped in corporate America to start businesses and become their own boss. My approach is to help entrepreneurs bootstrap their business and gain traction before leaving their full time employment. At the core of this approach is getting the business to the “Break Free Point” – which is the ideal time to quit your job and focus on your business.

While bootstrapping is a major part of my approach, it is a means to an end. Lean and Profitable was about bootstrapping. My blog therefore became about the means (bootstrapping, lean startup methods) and not the end (helping people break free from corporate America). Break Free Nation is my effort to focus on my core mission – which is to help people frustrated/trapped in their 9-to-5 jobs face the fear, start their business and quit their jobs.

The second reason for my re-branding is personal. I have been living a lie through my writing and that needed to change. I am a born again Christian and part of having a relationship with God is giving him the glory for what he has done and is doing in your life and business. However, if you read my blog, you get the impression that I am 100% responsible for my success.

It is true that a viable idea, hard work and perseverance are all critical to being successful in business. However, despite having all three components and more, I have fallen short many times.  God has been the difference. So, going forward, I want to stay true to who I am. My goal is not to convert anyone to my religion (although I am happy to share the story of Christ with anyone) but to show how God has been critical to my success and how he can help you break free from your corporate job and become a successful entrepreneur.

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5 Ways to Start a Business – Part 3

Sep 4th, 2011 | Starting a Business

Solve Other People’s Problems

Sometimes, your path to entrepreneurship runs through solving a problem in the marketplace. This may be a problem in your community or an issue a colleague at work is having. I started my first company, GiftCardRescue.com by solving a problem a friend was having. He had accumulated a stack of gift cards and wanted an easy way to turn them into cash. Since you cannot return a gift card to the merchant for cash, your only option outside of using the card is to sell it to a third party. Some have turned to eBay and Craigslist to unload their gift cards. My friend was not comfortable selling to strangers and going through the process of listing the cards and waiting to see if someone will buy them. I was intrigued by the opportunity and told him I will look into it.

When I got home, I did a Google search about the volume of unused gift cards and immediately arrived at my “aha” moment. It turns out 10% of all gift cards sold each year go unused, and at the time (2007), this was an $8 billion dollar industry (gift card sales for $2006 totaled $83 billion and projected to reach $100 billion in 2007). And that is how GiftCardRescue.com was born. Today, GiftCardRescue.com buys gift cards from those who don’t want them and resells them at a discount to those who would use them.

Shazi Visram, CEO & Founder of HappyBaby had a similar experience. It was while listening to a friend talk about the difficulty in finding nutritious meals for babies that led her to the idea for her company, HappyBaby, which makes organic food and snacks for babies and children. The company, which was founded in 2003 now has 5 different lines of products and is carried in over 10,000 stores. With 2010 revenue of $13.3 million, HappyBaby was number 68 on the 2011 Inc. 500 list and Founder Shazi Visram was a 2011 Winner of Ernst & Young Entrepreneur of the Year Award.

Others have started successful businesses solving a problem in the marketplace. Rich Webster, Jim McCarthy, and Robert Graff noticed something wrong with the ticketing business. Venues were giving away tickets for free to shows that were unsellable. Instead of being able to fill up a show, venues found themselves with a lot of unwanted seats. In October of 2001, the trio decided to do something about this and GoldStar was born.

Goldstar is membership-based website for half-price live entertainment tickets that allows venues to unload their extra tickets, make some additional revenue, and generate word-of-mouth marketing. To differentiate its model from the likes of Groupon and LivingSocial, Goldstar avoids splitting revenues with merchants and instead monetizes by taking a cut of the service charge on each ticket sold ($4.50 on average), allowing entertainment venues — or the shows themselves — to take home the full cost of each ticket sold.  Goldstar, which is profitable, now has over 2 million members in more than 20 major U.S. markets selling 1,200 to 1,500 half-priced tickets daily.

You may have the entrepreneurial bug but do not currently have a viable business idea to start with. Your big idea may come from solving a nagging problem in your community, the marketplace, or even for a friend. The key is to be on the lookout for opportunities. Every friend you talk to, every business you interact with, every networking event you attend, every vacation you take, every neighbor you talk to, every magazine you read is an opportunity to identify problems in the marketplace. If you do this long enough, your list of possible business ideas will grow, and soon, you will identify a problem worth solving.

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Is Entrepreneurship Right for You?

Aug 24th, 2011 | Starting a Business

If you are thinking about starting a business, you first have to decide if you have what it takes to run a business. While there are many factors that determine whether a business succeeds or fails, your effectiveness as a business owner depends on the following skills:

Comfortable Making Decisions

As an entrepreneur, you will have to learn to make decisions – and quickly. Often, you have to do this with limited or incomplete information. If you find this terrifying, running a business is not for you.  The good news is that you get better at making decisions over time, but right from the beginning, you will be confronted with daily issues that require you to make a decision. Your ability to gather as much information as you can, process the information and make a quick decision is going to be critical. If you fail at this, you will soon find yourself with layers of important issues that need your attention. That’s a recipe for disaster.

Handle Uncertainty

Another skill you are going to need is the ability to operate your business under a high level of uncertainty. Unknowns in business come in various forms. First, there is no guarantee your business is going to be successful. It may take years for you to gain traction or turn a profit. Second, there is no telling what your sales numbers are going to be. All you can do is forecast and work hard towards that goal. However, on any given day, whether you serve 2 or 20 customers is unknown. As an entrepreneur, you have to be able to live with that level of uncertainty and still get up each day and put in your very best.

High Risk Tolerance

Entrepreneurship by nature involves risk taking. The bigger the risk, the bigger the payoff. Conversely, taking big risks can also mean that when things go wrong, the consequences can be devastating. When I started GiftCardRescue.com, not only did I exhaust the little savings I had but also I maxed out six credit cards and cashed out my 401k. On top of that, I had to borrow money from friends and family to keep the business going. There was no guarantee the business was going to succeed but I was determined to go the distance and see what happens. While the prospect of having to pay back all that debt kept me up at night, I did not let that stop me. That is why it is often said that entrepreneurs are partly delusional. I think there is some truth to that. If you are uncomfortable putting everything on the line, you should probably keep your day job.

Ability to Wear Many Hats

When you start your business, you are going to have to play multiple key roles until you begin to hire people. During the early days of GiftCardRescue.com, I had to run the company by myself for a year, out of my basement. I had to take on the role of Business Development, Marketing, Customer Service Representative, Shipping Representative, Accountant, Blogger and Website Content Creator/Manager. Even when I finally moved out of the house and hired my first employee, I continued to play many of these roles, including being my own HR Manager and Janitor. You have to be ready and willing to step out of your comfort zone and learn new skills if you are doing to survive as an entrepreneur.

Flexible

It is said that no battle plan survives contact with the enemy. Similarly, no business plan survives contact with the customer. Regardless of how careful you plan, the business you end up with is not going to be what you started with or had in mind. That is why being flexible is important. When you start your business, your first priority should be to get as much customer feedback as possible and make changes to your model accordingly. Your goal is to get to the point where you have a clearer picture of what your customers want and how much they are willing and able to pay. Refusing to change when the data is clearly telling you that is a sure way to kill your business.

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5 Ways to Start a Business – Part 2

Aug 10th, 2011 | Bootstrapping, Starting a Business

Turn Your Hobby into a Business

Do you currently have a favorite hobby that occasionally makes you money on the side? Have you considered turning your hobby into a business? Maybe you make the best BBQ ribs in the world and your friends and family always tell you how great they are. You may even make them for parties and other special occasions when time allows. But up until now, you have not given a serious thought to turning this hobby into a business. Well, now may be the time. There are countless stories of successful businesses that started as hobbies and you could be one of them. The first question I often get when I talk to hobbyist about turning their passion into a business is their fear of running a business. While that is a legitimate concern, you will never know whether you have what it takes until you begin to answer the questions every entrepreneur has to address before they start a business. Here are 5 steps to guide you in turning your hobby into a business:

Step 1: Do I have Passion?

Before you take the plunge, you first need to decide if this is something you enjoy doing and if you can see yourself spending a few years getting the business off the ground. Starting and running a business is harder than most people appreciate. You often hear about the success stories but for many small businesses, it is a daily grind, filled with incredible highs and sickening lows. But the reward of owning your own business makes it all worth the effort. Here are 5 questions you need to answer to determine if you are cut out for business.

Step 2: Conduct a Market Research

Next, you need to conduct a market research to determine if there is a viable market for your hobby. If you are already making money doing this, that’s a good sign, but you need to find out if there is a large enough market out there for you to be able to make a living on your hobby. One way to do this is talk to other hobbyist doing the same thing and see what their experience has been. But the best way to get a pulse on the size of the market is to talk to potential customers and see if they will buy your product or service. Maybe there is a market selling your amazing ribs to your local college students or downtown (especially if there is no doing the same thing).

Step 3: Research Your Distribution Channel

Once you determine there is a market for your hobby, you have to look into your distribution channel. Can you do this at home or do you have to get retail space. There are other ways to sell your product without having to set up a formal retail location. For example, in the case ribs, rather than setting up a restaurant, you could have a mobile unit. If you have a product to sell, you should consider a mail order business or online mediums like Etsy and eBay to sell your products. You could also sign deals with other retail outlets to put your products on their shelf. Think outside the box to find a cheaper way to get your product or service in front of the customer.

Step 4: Develop a Support System

Find a mentor to guide you through the process. This could be someone in your space or a successful entrepreneur who has been there and done that. Also make sure your family is totally on board with you as this is going to impact them directly and indirectly for a long time.  You can also look to local entrepreneurial programs like SCORE to find mentors in your industry or related industries.

Step 5: Learn Bootstrapping Techniques

Do not let resource constraints stop you from starting your business. While you will have to spend money to get started, bootstrapping allows you to allocate your scarce resources in the most efficient way. This does not mean being cheap. It means focusing on areas of your business that will help you turn a profit faster while spending less. To learn more about bootstrapping, see my presentation on “How to Bootstrap a Startup”, which I delivered at Ignite Baltimore.

Readers, do you know of a business that started as a hobby? Have you tried turning your hobby into a business? Share your experience below.

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5 Ways to Start a Business – Part 1

Aug 2nd, 2011 | Bootstrapping, Starting a Business

Do you want to start a business but have no idea where to begin? Are you struggling to come up with a business idea? I have a solution for you. Over the next 5 weeks, I am going to talk about five different ways to start a business. The goal is to help you see the different way you can tap opportunities to start your own business. Below is part one of the series, where I talk about starting a business by solving your own problem:

Part 1 – Solve Your Nagging Problem

Business is about solving problems in the marketplace. And that includes solving your own problem. If you currently have a nagging problem, Continue reading →

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5 Ways to Start A Business – Introductory Video

Jul 27th, 2011 | Starting a Business

I am really excited to announce the launch of my new 5 part series titled “5 Ways to Start a Business”. Watch the video below to learn more and be on the lookout next Wednesday for Part 1. Subscribe to my feed here to receive this exciting 5 part series that is going to teach you everything you need to know about how to identify business opportunities and bring them to fruition. Sign up now, you have nothing to lose.

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